Stephen Harper unveiled his first major policy of the campaign on Tuesday: a plan to cut the excise tax on diesel fuel. But Liberals immediately attacked the proposal as bad for the environment.
The Conservatives would slash the tax to two cents a litre from four cents over the next four years. It would likely cost the federal treasury about $600 million annually, but help the struggling transportation industry and help reduce the cost of shipped goods.
"The purpose of this announcement is clear. At a time when Canadians are concerned about affordability and energy prices are rising we should do what we can to lower prices," Harper said in Winnipeg.
"This tax reduction will benefit consumers who buy virtually anything that moves by truck, train, ship or plane."
The Canadian Trucking Alliance estimated the plan would save truckers roughly $140 million each year.
"The trucking industry has been rocked in the last couple of years," spokesperson David Bradley told CTV's Mike Duffy Live. "We've seen diesel fuel prices absolutely skyrocket, and fuel has now overtaken labour as our number one cost."
He said truckers would likely reinvest the extra money into their industry, although some of the savings may get passed on to consumers.
"The old saying, 'If you've got it, a truck brought it,' is as relevant today as it ever was," he said. "About 90 per cent of all consumer products and food stuffs ... moves by truck in Canada."
Tom Velk, an economist with McGill University, said the plan was a "vote getter," but made little sense and could actually drive up prices for consumers.
"It's a terrible idea and I'm really disappointed Harper came up with it," he said.
"It's an elementary economic thing: If you cut the price of something, people are going to want to buy more of it. And if they buy more of it, they'll put pressure on the short supplies of fuel oil and oil products in general, and it will raise the price."
Instead, Velk said it would make more sense to allow for greater production of oil, or find a way to subsidize drilling.
"If Harper wants to cut a tax that will help everybody, they should cut taxes on the production side," he said. "You need to increase the supply of fuel oil, and energy products, not increase the demand side."
Liberals attack plan
Michael Ignatieff also slammed the Conservatives on their plan, saying it "drives a truck through their environmental credibility."
He said that in two years, truckers and motorists who use diesel fuel would be "screaming for more roads and bridges," but the government would no longer have the money to improve Canada's infrastructure.
"Where will the money come from? These guys are going to spend it. They're going to cut right down to the red line of deficit," Ignatieff, the Liberal party's deputy leader, told CTV's Mike Duffy Live on Tuesday.
Liberal Leader Stephane Dion called the plan a 19th-century approach to the challenges of the 21st century.
"This is just a gimmick that will make no real difference for Canadians, while actually undermining the country's ability to switch to cleaner renewable sources of energy," he said during a campaign stop in Napanee, Ont.
"When it comes to facing the challenge of the climate change crisis, Mr. Harper is going in the opposite direction from the international community and every responsible leader.
"His approach will do nothing to help Canadians who want to end their reliance on fossil fuels and it will do nothing to help the Canadian economy which is the worst performing economy in the G7."
Carbon tax
Harper contrasted the new measure with the Liberals' plan to introduce a carbon tax.
"This is a choice between two very different plans," he said. "We want to reduce the tax on diesel a bit. Others plan to increase the tax on diesel significantly. In fact, they plan to increase the price of everything."
But the Liberals, along with many environmentalists and economists, say the best way to combat climate change and reduce Canada's dependence on oil is through a carbon tax.
Dion said the carbon tax would be offset by cuts to income and corporate taxes.
"Taking a serious chunk out of your taxes and providing other benefits to reward good environmental practices is better than a few pennies on a tank of diesel," said Dion.
"Mr. Harper's announcement today is proof that every word he has said about concern for the environment is false. Dirty fossil fuels do impose a cost on the environment."
With files from The Canadian Press
